The post Why Bitcoin Remittance Solutions are not viable yet appeared first on iceCUBED Bitcoin and Litecoin Exchange - South Africa.
Many pro-bitcoiners tout Bitcoin Remittance solutions as the holy grail for the success of Bitcoin. Phrases like “Western Union charge up to 15% commission and banks can charge up to 30%, bitcoin transactions cost a fraction” are all too often heard at in the media and at conferences.
Bitcoin remittance can work, there is no doubt about that. But the caveats that exist are too many. Individuals might be able to use services like Mondome to find a great deal, but it is dependant on their specific needs at a specific time, with a set of specific circumstances. Heck, you could even make money by using bitcoin Remittance Solutions.
“Using bitcoin for remittance works, building a business around bitcoin remittance solutions, is a different kettle of fish all together.” – Gareth Grobler, Founder ICE3 Ltd.
5 Reasons why bitcoin remittance solutions is difficult
- Disproportionate Liquidity
- Untamed Volatility
- Lack of regulation around bitcoin remittance solutions
- Lack of easily accessible merchant gateways
- User Adoption
Disproportionate Liquidity
The majority of remittance flow is from developed economies to 3rd world and developing countries. Currently the majority of bitcoin demand is in developed economies. So you have an imbalanced proposition. In order for bitcoin remittance to work in a scalable business model, there needs to be a higher demand for bitcoin in local economies where majority of remittances are sent.
Untamed Volatility
Without a futures market with real depth taming the bitcoin price during high volatility periods (and we have had a few) is nigh impossible. Unless you are very brave and have a board that like taking risks, managing volatility is critical to the success of any bitcoin remittance provider. You simply can not shift this risk to the consumer, which many of the current start ups are doing.
Lack of regulation around bitcoin remittance solutions
Due to the lack of regulation around the world for internet currency, building a scalable business which is compliant in all jurisdictions it operates in, is a mammoth task. It requires serious investment, time and resources, which is part of the reason traditional operators like Western Union or Money Gram have such high fees.
Lack of easily accessible merchant gateways
To scale, the recipients of remittances need to be able to receive the value without having access to a bank account. Most bitcoin exchanges around the world require you to have access to a bank account and need you to provide proof of address. Which is going to be difficult is Billy is travelling in Africa, loses all his stuff, and then needs his mom sends him bitcoin…. Who is going to exchange it into local currency for him and what happens when the bitcoin price drops in that period. There are answers out there, this problem exists, but it is also an opportunity for innovation
User Adoption
This is the “biggy”. Without mass user adoption of Bitcoin as a technology, in various forms, building businesses that rely on bitcoin’s success as a currency is going to be an uphill struggle. We simply need more companies investing in use of bitcoin as a technology, which in turn will increase its chance of success as a currency.
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This post first appeared on Ice3x Bitcoin Exchange South Africa, please read the originial post: here
